Your Credit History

As part of the loan application process, virtually all lenders will want tosee a copy of your credit report. The report will list all your long-termdebts (credit cards, mortgage payments, automobile and student loans, etc),as well as your payment history. If you don’t have a copy of your creditreport, most lenders will generally require you to pay for a copy when theyprocess your loan application.However, most real estate experts agree that it is a good idea to obtain acopy of your credit report several months before you apply for a loan.

This is so you have a chance to resolve any problems with your credit before yourbank sees it. U.S. Federal law ensures that you have access to your creditreport, which may be obtained from your local credit bureau or any ofseveral national firms that specialize in credit reports.

Late payments
For most people, problems with their credit report are likely related tolate payments on a debt.
If you were late one month in paying off yourcredit card, but otherwise have a good payment history, chances are mostlenders won’t be too concerned. But if you have a history of late paymentsyou’ll need to document the reasons why. A slow payment history won’tnecessarily get you turned down for a loan, but you may have to pay a higherrate of interest or otherwise prove to the lender that you can repay yourloan in a timely fashion.

Errors on your credit report
Many people are surprised to learn that credit reports can often containserrors or inaccurate information. If this is the case with your creditreport, you’ll need to contact the reporting agency or creditor to have theproblem resolved. This can sometimes be a slow process, so make sure to giveyourself time to clear up the mistake.

Bankruptcies and foreclosures
There’s no getting around it, a bankruptcy on your credit report is not agood thing. But that doesn’t mean you still can’t obtain a loan. Even thougha bankruptcy may stay on your credit report for seven to ten years, lenderswill often consider the circumstances surrounding a bankruptcy (familyillness, injury, etc.). Moreover, if you have reestablished good creditsince the bankruptcy, a lender will be more inclined to approve your application.